Maurice Tutor

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Algebra,Applied Sciences,Biology,Calculus,Chemistry,Economics,English,Essay writing,Geography,Geology,Health & Medical,Physics,Science Hide all
Teaching Since: May 2017
Last Sign in: 402 Weeks Ago, 5 Days Ago
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Education

  • MCS,PHD
    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

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  • Professor
    Phoniex University
    Oct-2001 - Nov-2016

Category > Accounting Posted 24 Jul 2017 My Price 7.00

Devonly Company

Devonly Company produces a variety of products. One division makes gas grills for outdoor cooking. The division’s projected income statement for the coming year is as follows:
Sales (120,000 units) …….$7,500,000
Less: Variable expenses …..3,450,000
Contribution margin ……..$4,050,000
Less: Fixed expenses ……...3,375,000
Operating income …………$ 675,000
Required:
1. Compute the contribution margin per unit, and calculate the break-even point in units. Repeat, using the contribution margin ratio.
2. The divisional manager has decided to increase the advertising budget by $100,000 and cut the average selling price to $58. These actions will increase sales revenues by $1 million. Will the division be made better off?
3. Suppose sales revenues exceed the estimated amount on the income statement by $540,000. Without preparing a new income statement, determine by how much profits are underestimated.
4. How many units must be sold to earn an after-tax profit of $1.254 million? Assume a tax rate of 34 percent.
5. Compute the margin of safety in dollars based on the given income statement.
6. Compute the operating leverage based on the given income statement. If sales revenues are 20 percent greater than expected, what is the percentage increase in profits?

Answers

Maurice Tutor
(5)
Status NEW Posted 24 Jul 2017 12:07 PM My Price 7.00

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